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Thursday,
May 28, 2009
(Cont'd from
above)...
Jim (cont'd):
Jim:
At this point,
Vulcan Materials has
fallen thru that
level… time to
declare victory… it
is at $42... a 25.9%
decline from where I
told you to get out…
so today, right now…
I am releasing
Vulcan Materials
from the sell block…
as the stock has
served its time… I
am however letting
T.I. use its cell…
and I do not mean
Telecom Italia… with
that notorious big
juicy 4.7% yield,
almost unheard of
from a company that
is all about rocks…
I would even be a
buyer of VMC… and
not just for the
yield either… that
alone would not have
been enough to
spring Vulcan
Materials from the
sell block… given
that it delivered an
ugly earnings miss
on lower volumes and
weaker pricing when
it reported its
first quarter… part
of the problem with
the quarter was the
stimulus, such as it
was… which failed to
materialize in the
company’s earnings..
.something that
should not be the
case in the future.
Longer term I think
VMC is going to
benefit from
increased highway
spending and less
home building…
because every dollar
of highway spending
consumes 7 times as
much aggregate as a
dollar of spending
on real estate…
while Obama’s
stimulus package was
basically a
pastiche, if not a
mosaic, of hand outs
to the states… and
extensions of
unemployment
benefits… Vulcan
Materials still
benefits enormously
from the hand outs
to the states, part
of the package… now
that we have a lot
more clarity of
where that money is
going… I can get
behind this stock
with conviction.
Of the $27.5B for
highway and bridge
projects… 60% are
going to states
served by Vulcan
Materials… even
better, it looks
like key states are
meeting the federal
requirement that 50%
of the highway money
that they got from
the stimulus… has to
be committed to
projects within 120
days from when they
get the dough… hey,
California has
already approved 57
projects, $626M
worth… 73% of them
in counties served
by Vulcan Material…
Georgia, North
Carolina, Alabama…
all of the states
where Vulcan
Materials sells it
rocks have started
approving and
awarding contracts
too.
I have to tell you,
at this point I
always have to reach
back… I have to
quote the noted
stock sage Kevin
Rudoph, and Little
Wayne… let it rock…
this is a classic
example of a company
that is paying you
to wait… in VMC’s
case we are waiting
until the stimulus
funded projects
start kicking in…
and do not worry
Vulcan Material’s
has a solid enough
balance sheet to
fund itself and its
dividend until then…
this stock is so
hated by the
analysts community…
of the 10 who cover
the stock, 6 have
holds, 3 have sells,
1 little measly
little buy… which
makes me believe
that Vulcan
Materials has room
to run… now that it
is no longer
confined to the sell
block.
It was right to sell
this stock when it
was about 15 points
higher… and we knew
next to nothing
about the details of
the stimulus plan…
now, I think buying
Vulcan Materials for
the right move… for
the yield, for the
new projects for the
stimulus, for its
lack of sponsorship
makes sense… I guess
you could say that
Vulcan has got the
Mr. Spock seal of
approval… go long
and prosper.
At the same time, we
need to talk about a
stock that I believe
belongs in the Sell
Block… really more
of a holding pen
until further
notice… Cigner, that
is
CIGNA Corp. (CI)
but I am from
Philadelphia so I
can mispronounce it…
on Tuesday this
health insurance
company’s CFO, Mike
Bell, resigned after
7 years in that
post, 25 years with
the company… when
the CEO or CFO
leaves a company
like that… well, you
sell first and then
you ask questions
later… that is one
of my rules, rule
number 19 in the
first gospel
according to me,
Jim Cramer's Real Money: Sane Investing In An
Insane World…
when one of the two
top people running
publicly traded
companies suddenly
resigns… makes me
nervous… management
said that the CFO
decided to leave
because he had hoped
to be promoted to be
the president and
CEO… someone else
snagged the
president job last
June… became the
CEO’s heir apparent…
could be, why did
the CFO just leave
11 months… and with
three other high
level resignations
in the past year…
lets take a signal
along with a grain
of salt… if not a
box of Morton’s
salt.
I am not implying
that there is any
kind of impropriety
there… even the
unusual… maybe
something that
raises eyebrows… but
on the off chance
that this CFO’s
resignation is
something that is
seriously wrong…
let’s keep this
stock in the sell
block until we are
sure that everything
is okay.
Okay, one more sell
block name… this one
a joyous name… Rick
Bensignor, of Top
Gun Trader and
Execution Holdings
fame… phoned in to
say that it is time
to schnitzel some
Research
In Motion (RIMM)
here… who am I to
argue when Top Gun
Trader Bensignor
recommended RIMM’s
purchase at $59 at
the beginning of
April on this show…
and today it hit
$80... nice going
Top Gun Trader.
The bottom line…
▼ ▼
▼ ▼
▼
 Jim's
comments AFTER the
interview:
When you do not know
it, you do not buy
it… that philosophy
has saved us a lot
of pain in
Vulcan Materials Company
(VMC)…
which I like now
that we do know
about the stimulus…
and the stock is
much lower… and
until we know a
little more about
the CFO resignation
at
CIGNA Corp. (CI)…
all I say, it raises
eyebrows… lets do
some selling.
The facts are in for
Vulcan Materials… I
am releasing it from
the sell block…
Cigna, raises
eyebrows… Top Gun
Trader Rick
Bensignor says take
a little schnitzle
in
Research
In Motion (RIMM)…
who am I to fight
it.
[verbatim recap]
▼ ▼
▼ ▼
▼
Jim went on after
this segment to take
questions from
callers, and
responded with his
comments...
```````````````````````````````````````````````````````````````````````````````````
Q:
We set Taylor up
with a small
education fund. It
has got some good
yield consumer
industrial stocks.
We are considering
adding an
infrastructure stock
like MTZ. Right now,
Taylor is saying
something like no,
tell Jim I want more
Disney. So, what do
you think?
Jim:
Okay, this is
precisely when you
take a flyer like
MTZ… why I call it a
flyer, because it is
an infrastructure
play… I really like
it… I will tell you,
that that is the
kind of thing that
could be bumpy… and
because you have a
long term horizon
that is precisely
the way to do it… in
my book, in the one
that I think has the
kids stock,
Stay Mad For Life…
I am also saying
that McDonald’s is
very right, not just
Disney.
```````````````````````````````````````````````````````````````````````````````````
Q:
What is going on
with NRG and all of
those puts that were
traded yesterday?
And what should a
home gamer like me
watch out for when a
company is targeted
for acquisition?
Particularly when
the bid becomes
hostile like Exxon
going after NRG?
Jim:
Well, I do not know
why NRG does not
succumb, because I
have to tell you… my
friend, buddy, pal,
and law school
roommate… David
Crane, we have got
to get him back on…
to answer the
question about the
put buying and the
acquisition… that
way I can give a
better answer than
just off of the
cuff… we are going
to ask David Crane,
lets get him.
```````````````````````````````````````````````````````````````````````````````````
Q:
With your bottom in
housing fix just a
couple of weeks
away, and the way
that Treasury has
taken on the ? in
the last couple of
days, how is that
going to affect the
refinancing and
interest rate
activity in home
buying?
Jim:
Well, I have to tell
you right here that
Rick Santella and I…
he and I both agreed
that we are in a
moment of stampede…
we are in a moment
here where there is
actually going to be
a stampede of
buying… and by the
way, the California
numbers that came
out today indicate
prices increase, and
sells increasing…
the people who
continue to say that
housing has not
bottomed… I think
will be left behind…
I think that you
have accept the fact
that rates are going
up because business
is getting better…
and that is
terrific.
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[verbatim
recap]
[end of segment]
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